9 Gold Stocks to Stave Off Coronavirus-Induced Volatility

Stocks to buy

What was once a disease that many pundits compared to the flu — the coronavirus from China — has turned into a global pandemic. Recently, we’ve seen historical volatility rip through benchmark indices such as the Dow Jones and S&P 500. Promises of stimulus packages have introduced some optimism, but the overall mood appears shaky. That’s because — if we’re being quite honest — nothing glitters like gold during times of turmoil. As a result, some have turned their attention to gold stocks.

Personally, I believe physical gold is good to own as a safeguard for your portfolio. No, I’m not suggesting an underground bunker full of the stuff like some ardent proponents of precious metals. But a modest exposure can go a long way.

That said, I understand the drawbacks of gold bullion. Primarily, as physical assets, they’re not at all convenient. Further, if you decide to diversify your metal holdings with cheaper commodities like silver, they can become rather unwieldy. With gold stocks, they’re just like any other equity position you own, meaning storage and security are virtually non-issues.

Furthermore, gold stocks can fly far higher than holding the physical asset. Better yet, you can choose your risk-reward profile. For instance, you may allocate most of your precious metal positions in large-capitalization miners, while throwing in some “stupid money” funds toward junior mining companies.

Of course, the opposite is also true, as we’re seeing right now. While gold prices are flirting with multi-year highs, gold stocks have been hurting. Undoubtedly, this sector has big risks. But with the irrationality that we’re witnessing in the markets, I believe the longer-term narrative for is very positive for these nine gold stocks.

Barrick Gold (GOLD)

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One of the biggest gold stocks by market cap, Barrick Gold (NYSE:GOLD) is a great anchor to have for your precious metal portfolio. Since the start of the year, GOLD stock is up 6.5%, although at one point, shares were up nearly 18% year to date. I’d consider it an early warning test to gauge its true potential.

First, as a major institution within the mining industry, GOLD stock is likely to offer you a relatively evenhanded exposure to daily gold fluctuations. Fundamentally, the underlying company has been making significant progress. For instance, in its last earnings report, Barrick rang up revenue of $2.88 billion, up over 51% year-over-year.

Second, despite the choppiness, GOLD stock has been trending nicely on a bullish channel in place since last November. With fear only ramping up due to the coronavirus, Barrick Gold should perform quite well this year.

Agnico Eagle Mines (AEM)

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Another one of the big players among gold stocks, Agnico Eagle Mines (NYSE:AEM) should have enjoyed a better start to 2020. In its most recent fourth quarter of 2019 earnings report, Agnico Eagle delivered adjusted earnings per share of 37 cents. Additionally, the miner generated top-line sales of $753.1 million, which was up 40% against the year-ago quarter. Both figures beat covering analysts’ consensus targets.

Unfortunately, management guided down their expectations for gold production for the year. Instead of 1.9 million to 2 million ounces, the leadership team anticipates 1.875 million ounces. That sent AEM stock down in a hurry.

Clearly, Wall Street was freaked out because the production issues are coming at a bullish time for gold prices. Still, management anticipates the problems to be temporary. Frankly, the selloff is probably overdone because the broader narrative (i.e., fear-driven markets) for AEM stock is very optimistic.

Wheaton Precious Metals (WPM)

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In my opinion, no portfolio of gold stocks to buy is complete without mentioning companies like Wheaton Precious Metals (NYSE:WPM). Unlike traditional mining units, Wheaton uses a streaming business model. Rather than mine for metals themselves, WPM buys out a mining company’s production (either part or whole) at predetermined prices. As a result, this makes WPM stock far more stable than traditional mining investments.

Of course, this situation works the opposite way as well. If gold explodes into a mania, WPM stock is unlikely to skyrocket with its peers. Currently, speculators are gambling that we’ll see an enormous sentiment lift. For instance, China’s government has been busy bolstering their gold reserves, while other nations have been lackadaisical in this department.

Still, this business of gold is a cruel one. Thus, the smart investor’s play is to have at least some exposure to safer bets.

Sibanye Stillwater (SBSW)

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As the largest individual gold producer in South Africa, Sibanye Stillwater (NYSE:SBSW) is one of the most popular gold stocks. Certainly, it doesn’t hurt that the underlining country features an abundance of riches. Therefore, I consider the currently volatility — though admittedly steep — in SBSW stock a buying opportunity.

Contributing to the red ink, though, is the drama surrounding palladium. Rather quietly, palladium exploded to become the most expensive precious metal — well higher than gold, platinum and silver. A major reason for this is that the metal is very strategic as many industries utilize it for their products.

But with concerns rising about a possible global economic recession, the palladium price took a huge hit in late February. Theoretically, this makes SBSW riskier than other gold stocks. Nevertheless, palladium’s relevance to the electronics industry should eventually bolster demand.

Coeur Mining (CDE)

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As one of the mid-tier gold stocks, Coeur Mining (NYSE:CDE) typically would offer you a balance between upside rewards and downside mitigation. However, this year, it’s all red ink, with CDE stock plummeting nearly 53%. Admittedly, this isn’t what I was hoping for. On the flipside, though, it does offer a compelling entry point given the positive environment for gold.

As with other mining companies, analysts didn’t like the mixed bag that Coeur delivered in terms of metals produced. On certain projects, lower ore crushing rates led to overall lower production. However, management invested in higher-capacity machinery which should resolve these challenges. Therefore, it’s possible that CDE stock could get back on the Street’s good graces.

For now, shares are at a crazy discount, returning to levels seen back in April 2019.

Hecla Mining (HL)

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Another popular mid-tier name, several investors were optimistic about Hecla Mining (NYSE:HL) heading into the new year. In the final calendar quarter of 2019, HL stock nearly doubled in value. Early in January, management seemingly justified that optimism with strong production figures: silver production was up 22% and gold was up 4%. Unfortunately, “seemingly” is the operative word here.

When the company released its actual results for the quarter ending Dec. 31, Wall Street wasn’t quite so impressed. Despite revenue growth of 68% YOY to $236.3 million, Hecla still inked a net income loss of $8 million. Basically, the organization is not as efficient as other miners. And that’s worrisome given that this is a positive environment for gold stocks.

However, I find it interesting that investors were willing to drive up HL stock to crazy levels in the final quarter of 2019. With most of those gains erased, speculators have a much more attractive entry point.

Americas Gold and Silver (USAS)

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For the last three gold stocks on this list, I’m going to focus my attention on the junior miners. Fair warning: these are extremely speculative names, so please don’t go crazy on them.

First up is Americas Gold and Silver (NYSEAMERICAN:USAS). One of the more promising of the small miners, USAS stock experienced a strong run up in December. However, as we rang in the new year, shares slowed, then became downright volatile, beginning in February. Unfortunately, disappointing financial results negatively impacted the equity valuation.

Due to a recapitalization plan at one of Americas Gold and Silver’s projects, production for certain metals were down for the year. Furthermore, expenses related to mining industrial metals increased, impeding earnings.

On the positive side, the company expects to see big increases from the addition of a new project. Therefore, USAS stock might appeal for the risk takers.

Great Bear Resources (GTBDF)

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Although one of the most bullish small-cap gold stocks of last year, presently, Great Bear Resources (OTCMKTS:GTBDF) is living up to its name. After trading in a steady range for most of this year, GTBDF began imploding in late February. So far, shares are down over 34%.

Essentially, much uncertainty exists among lesser-known gold stocks. Frankly, Great Bear is an extremely speculative belt, fueled in part by fundamentals and hope. However, the fundamentals encompass a 100% royalty-free interest in the Dixie project. This is an area known for high-grade gold and is situated very close to the renowned Red Lake gold district.

Will Dixie turn into another Red Lake, which has produced roughly 30 million ounces of gold? Obviously, no one knows for sure. But that is the compelling story driving GTBDF stock.

Revival Gold (RVLGF)

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If you want a junior miner that isn’t completely nuts, take a look at Revival Gold (OTCMKTS:RVLGF). Currently, Revival Gold has interests in three projects: Beartrack, Arnett Creek Gold and Diamond Mountain Phosphate. According to their website, management is interested in pursuing other exploration and development opportunities, which may entail mergers and acquisitions.

For now, RVLGF stock is a gamble that these projects will develop according to plan. Naturally, this is a huge risk. However, shares have traded sideways — albeit in choppy fashion — since the spring of 2018. To me, this implies that the markets are reserving judgment.

I suppose no bad news is good news for RVLGF stock. While I’d like to give a more convincing argument, this is the nature of junior mining investments. Enjoy!

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he is long the precious metals mentioned in this article.

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